Adolescence is a time period of great change with significant development in both physical characteristics and social behaviors (Spear, 2000). It is also a time period of peak onset for psychiatric disorders (National Comorbidity Survey Replication study; Kessler, et al., 2005). About 50% of Americans will meet criteria for a psychiatric disorder in their lifetime with the first onset occurring in childhood or adolescence (Kessler et al., 2005). Given the prevalence of psychiatric disorders and early onset, an emphasis should be placed on the identification and treatment of mental illnesses in adolescence to target early problem behaviors before they become ingrained in adulthood. Borderline Personality Disorder (BPD) is a mental illness which involves significant problems in maintaining healthy social relationships, as well as other emotional and behavioral problems. Many theoretical models have been proposed to explain the social impairments in BPD. Fonagy and colleagues (2009) have suggested that problems BPD patients experience in social relationships are a result of impairment in attachment-based social-cognitive abilities, specifically, in theory of mind or mentalization. Mentalization refers to an individual's capacity o understand and interpret the behavior of self and others in terms of mental states (Fonagy, et al., 1991), and develops during infancy and childhood from early attachment experiences (Fonagy & Sharp. 2008). Recently, Stanley and Siever (2010) have proposed a neuropeptide model of BPD which suggests that dysfunction of oxytocin impairs mentalization, which may play an important role in the onset of interpersonal symptoms of BPD. In adolescents, evidence from our lab support the link between mentalization impairment in youth and emerging BPD traits (Sharp, Pane, Ha, et al., 2011; Sharp, Ha, Carbone, et al., in press) as assessed by an in-vivo mentalization task. Specifically, adolescent patients with emerging BPD showed a style of social- cognitive reasoning characterized by hypermentalizing (or over-interpretation of social cues; Sharp et al., 2011). Against this background, the overall goal of this research is to provide the foundation for understanding the social-cognitive mechanisms involved in the emergence of BPD in adolescents with the aim of improving early interventions for youths (12-17 years). To this end a double-blind, randomized, and placebo-controlled experimental design will be used to examine the effects of intranasal oxytocin on in-vivo mentalization in a sample of adolescent BPD patients in comparison to a group of healthy non-clinical adolescents. The specific aims are two-fold: 1) to investigate the effects of intranasal oxytocin on in-vivo mentalization capacit (specifically hypermentalizing) in adolescents with BPD compared to a non-clinical group of adolescents, and 2) to evaluate the potential role of trait-based mentalization capacity in moderating the relation between oxytocin and in-vivo mentalization capacity. This proposed research will have the potential to address integral empirical questions and provide a foundation for research investigating early interventions for BPD.